Microsoft is laying off 268 employees across its Xbox organisation, Xbox content director Matt Booty has confirmed, with Halo Studios and several other unnamed teams among those affected.

The redundancies will also reach Xbox's management tier and central office. Microsoft has not disclosed the full list of impacted studios, leaving the precise studio-level footprint of the cuts unclear.

What studios are being reshuffled?

The layoffs sit alongside a substantial reorganisation of Xbox's studio portfolio. Booty's statement outlined the following structural changes:

• Obsidian will become part of Bethesda
• Microsoft Casual Games, which operates Minesweeper and the Solitaire Collection, will be incorporated into King
• Playground Games and Turn 10 Studios will merge into a single studio
• Rare and World's Edge will work under the Activision umbrella
• Activision will spearhead future Halo development through a newly formed team, with a "small part" of Halo Studios retained to continue supporting existing projects

Halo is the most consequential of these moves. Shifting primary Halo responsibility back to Activision reverses a long-standing arrangement within Xbox first-party development and signals that Microsoft no longer views Halo Studios as the franchise's natural home.

What is happening with Ninja Theory?

Booty acknowledged that Microsoft has been unable to find a buyer for Ninja Theory, noting that "two deals have already fallen through to date." The company has now begun negotiations about closing the studio, Booty added, though Microsoft hopes to avoid that outcome.

The Ninja Theory situation is the most exposed of the changes announced. Without a third acquisition deal materialising, the studio faces the prospect of full closure. Booty's framing is candid about the timeline: two failed transactions have preceded the closure consultation, and Microsoft is moving toward an outcome it would prefer not to reach.

And Arkane Lyon?

The future of Arkane Lyon remains unresolved. Booty said consultations regarding the studio's separation from Microsoft are expected to continue until the end of the year. The studio now operates in a holding pattern while those discussions proceed, with the prospect of divestment rather than closure on the table.

What does this mean for studios and teams?

The restructure concentrates Xbox's reporting lines around its largest and most clearly monetised franchises. Halo returns to the group that originally created it, while the Playground/Turn 10 combination consolidates the two studios under a single operational roof.

Rare and World's Edge now share an organisational home with Activision's existing portfolio. Microsoft Casual Games — responsible for Minesweeper and the long-running Solitaire Collection — moves to King, aligning its casual output with a mobile-focused operator.

Booty's announcement pairs the 268 redundancies with a structural simplification that consolidates management layers and central-office overheads. The cost is concentrated in people rather than projects.

What's next?

Watch for further studio-level disclosures as the 268 redundancies proceed, and for a resolution on Arkane Lyon's separation by year-end. The Ninja Theory consultation window is the most immediate pressure point: absent a third buyer, closure becomes the likely outcome.